NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Hammer Fiber Optics Holdings Corp. (“the Company”) is a telecommunications company investing in the future of wireless technology. Hammer’s “Everything Wireless” go to market strategy includes the development of high-speed fixed wireless service using its wireless fiber platform, Hammer Wireless® AIR, Mobility, Over-the-Top services such as voice, SMS and video collaboration services, the construction of smart city networks and hosting services including cloud and colocation.
NOTE 2 – CORPORATE HISTORY AND BACKGROUND ON MERGER
The Company was originally incorporated in the State of Nevada on September 23, 2010, under the name Recursos Montana S.A. The Company’s principal activity was an exploration stage company engaged in the acquisition of mineral properties then owned by the Company.
On February 2, 2015, the Company entered into a Share Exchange Agreement with Tanaris Power Holdings, Inc., whereby the Company acquired 100% of Tanaris Power Holdings, Inc. issued and outstanding common stock in exchange for shares of the Company’s common stock equal to 51% of the issued and outstanding common stock of the Company. Tanaris Power Holdings, Inc. was the owner of certain rights in connection with the marketing and sale of smart lithium-ion batteries and battery technologies for various industrial vehicles markets and related applications. On March 6, 2015, the Company amended its Articles of Incorporation to change its name to Tanaris Power Holdings, Inc.
On April 25, 2016, Tanaris Power Holdings, Inc., a Nevada corporation entered into s Share Exchange Agreement (the “Share Exchange Agreement”) with Hammer Fiber Optics Investments, Ltd., a Delaware corporation (“HFOI”), and the controlling stockholders of HFOI (the “HFOI Shareholders”). Pursuant to the Share Exchange Agreement, the Company acquired 20,000,000 shares of common stock of HFOI from the HFOI shareholders (the “HFOI Shares”) and in exchange, the Company issued to the HFOI Shareholders 50,000,000 (post-Merger) restricted shares of its common stock (the “HMMR Shares”). As a result of the Share Exchange Agreement, HFOI shall become a wholly owned subsidiary of the Company.
On April 13, 2016, the Board of Directors (BOD) approved a Plan of Merger (the “Plan of Merger”) under Nevada Revised Statuses (NRS) Section 92A.180 to merge (the “Merger”) with our wholly-owned subsidiary HFO Holdings, a Nevada corporation, to effect a name change from Tanaris Power Holdings Inc. to Hammer Fiber Optics Holdings Corp. The Plan of Merger also provides for a 1 for 1,000 exchange ratio for shareholders of both the Company and the HRO Holdings, which had the effect of a 1 for 1,000 reverse split of the common stock. Articles of Merger were filed with the Secretary of State of Nevada on April 13, 2016 and, on April 14, 2016, this corporate action was submitted to Financial Industry Regulatory Authority (the “FINRA”) for its review and approval.
On May 3, 2016, the FINRA approved the merger with the wholly-owned subsidiary, HMMR Fiber Optics Holdings Corp. (“HFO Holdings”). Accordingly, thereafter, the Company’s name was changed and the shares of common stock began trading under new ticker symbol “HMMR” as of May 27, 2016. The merger was effected on July 19, 2016.
In 2016 Hammer Fiber Optics Investments Ltd deployed its first beta network in Atlantic County, New Jersey. The network used a spectrum license agreement from Straightpath Communications, LLC. On January 17, 2018 Verizon Communications, LLC purchased Straightpath Communications, LLC and on July14 2018, Verizon terminated the spectrum license agreement effective October 31, 2018 despite communications that it would continue to honor the agreement. On October 31, 2018 the Company ceased operations of the network in Atlantic County and subsequently classified the subsidiary as a discontinued operation.
On November 1, 2018, the Company acquired Open Data Centers, LLC, 1stPoint Communications, LLC and its subsidiaries. 1stPoint and its subsidiaries possess CLEC licenses in Florida, New York State, and a nationwide CMRS (Commercial Mobile Radio Services) license. The companies operate data center facilities in Piscataway, New Jersey and Homewood, Alabama. On December 17, 2018, the Company closed the acquisition of Endstream Communications, LLC, a wholesale voice operator in the United States.
On September 1, 2019, the Company acquired American Network Inc., which included vendor contracts, CLEC agreements and telephone number assets.
6
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The interim financial statements for the three and nine months ending April 30, 2020 are unaudited. These financial statements are prepared in accordance with requirements for unaudited interim periods and consequently do not include all disclosures required to be in conformity with accounting principles generally accepted in the United States of America. The results of operations for the interim periods are not necessarily indicative of the results for the full year. In management's opinion, all adjustments necessary for a fair presentation of the Company's financial statements are reflected in the interim periods included and are of a normal recurring nature. These interim financial statements should be read in conjunction with the financial statements included in our Form 10-K, for the year ended July 31, 2019, as filed with the Securities and Exchange Commission (“the SEC”) at www.sec.gov
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash in banks, money market funds and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
Property and equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the useful lives of the assets. For furniture and fixtures, the useful life is five years, Leasehold Improvements are depreciated over their respective lease terms. Expenditures for additions and improvements are capitalized. Repairs and maintenance are expensed as incurred.
Impairment of long-lived assets
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted cash flows to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not recognized any related impairment losses.
Indefinite lived intangible assets
The Company reviews property, plant and equipment, inventory component prepayments and certain identifiable intangibles, excluding goodwill, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company has not recorded any related impairment losses.
The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company has not recorded any related impairment losses.
7
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition
We adopted ASC 606 on August 1, 2018. Revenue is measured based on a consideration specified in a contract or agreement with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Incidental items that are immaterial in the context of the contract are recognized as expense. Unearned revenues are recorded when cash payments are received or due in advance of the performance of the services. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
Income taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of April 30, 2020, the Company did not have any amounts recorded pertaining to uncertain tax positions.
Fair value measurements
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The Company has no assets or liabilities valued at fair value on a recurring basis.
Level 3 – Unobservable inputs reflecting management’s assumptions about the inputs used in pricing the asset or liability.
Consolidation of financial statements
Hammer Fiber Optics Holdings Corp. is the parent company and sole shareholder of Hammer Wireless Corporation and its subsidiaries, 1stPoint Communications, LLC and its subsidiaries, which includes Shelcomm, Inc, Endstream Communications, LLC and American Network Inc.. The financial statements for Hammer Fiber Optics Holdings Corp. and its wholly-owned subsidiaries are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. It’s subsidiaries Open Data Centers, LLC and Hammer Fiber Optics Investments, Ltd. are discontinued and are considered discontinued operations.
8
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic and Diluted Earnings (Loss) Per Share
The basic earnings (loss) per share are calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. As of April 30, 2020, and July 31, 2019, there were no common stock equivalents outstanding.
Recent accounting pronouncements
In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718) (“ASU 2018-07”). ASU 2018-07 provides for improvements to nonemployee share-based payment accounting by expanding the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The awards will be measured at grant date, consistent with accounting for employee share-based payment awards. The measurement date has been redefined as the date at which the grantor and grantee reach a mutual understanding of the key terms and conditions of the award. The requirement to reassess classification of equity- classified awards upon vesting has been eliminated. We do not expect the adoption of this standard to have a material impact on the Company’s financial statements. The Company adopted ASU 2018-07 August 1, 2018.
In February 2016, FASB issued ASU No. 2016-02, Accounting Standards Update No. 2016-02, Leases (Topic 842). ASU 2016-02 provides for improvements for accounting guidance related to leasing treatments on financial statements as a response to user input. The update maintains two classifications of leases, Financial lease and Operating leases. The Update is effective for fiscal years beginning after December 2015, 2018. The company has not yet adopted this standard but there may be impact to the presentation of the Company’s financial statements during the period of adoption.
NOTE 4 – DISCONTINUED OPERATIONS
Hammer Fiber Optics Investment Ltd ceased operations in the Atlantic County geographical market on October 31, 2018 when Verizon Communications, LLC terminated the spectrum lease agreement. The operations of Hammer Fiber Optics Investments, Ltd were classified as a discontinued operation. Reporting of the discontinued operation is in accordance with Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.
Due to customer losses associated with the novel coronavirus and the loss of clients due to other causes, Open Data Centers, LLC will cease its operations. As of May 1, 2020 the operations of Open Data Centers, LLC were classified as a discontinued operation. Reporting of the discontinued operation is in accordance with Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Open Data Centers has been organizing the orderly transition of its customers to another colocation service.
9
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 4 – DISCONTINUED OPERATIONS (CONTINUED)
The following summarizes the assets and liabilities of the discontinue operations:
|
|
|
April 30,
2020
|
|
July 31,
2019
|
|
Cash and cash equivalents
|
$
|
9,903
|
$
|
8,838
|
|
Accounts receivable
|
|
222,232
|
|
148,756
|
|
Property and equipment, net
|
|
107,054
|
|
1,387,120
|
|
Intangible assets
|
|
223,703
|
|
230,566
|
|
|
|
562,892
|
|
1,775,280
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
5,523,701
|
|
5,273,318
|
|
Loans payable
|
|
3,313,544
|
|
3,439,036
|
|
Rent concessions
|
|
114,595
|
|
125,445
|
|
Deferred Revenue
|
|
8,600
|
|
8,600
|
|
|
|
8,960,440
|
|
8,846,399
|
|
|
|
|
|
|
|
Net Assets (Liabilities)
|
$
|
(8,397,548)
|
$
|
(7,071,119)
|
The following summarizes the operations of the discontinue operations:
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
April 30,
2020
|
|
April 30,
2019
|
|
April 30,
2020
|
|
April 30,
2019
|
|
Revenues
|
$
|
127,968
|
$
|
182,817
|
$
|
524,610
|
$
|
301,176
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
232,303
|
|
269,540
|
|
598,671
|
|
448,520
|
|
Selling, general and administrative expenses
|
|
5,046
|
|
4,613
|
|
30,544
|
|
110,377
|
|
Impairment expense
|
|
-
|
|
-
|
|
-
|
|
6,807,753
|
|
Depreciation expense
|
|
2,587
|
|
3,881
|
|
10,348
|
|
203,881
|
|
|
|
239,936
|
|
278,034
|
|
639,563
|
|
7,570,531
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
(111,968)
|
|
(95,217)
|
|
(114,953)
|
|
(7,269,355)
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
749
|
|
352
|
|
1,756
|
|
80,352
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(112,717)
|
$
|
(95,569)
|
$
|
(116,709)
|
$
|
(7,349,707)
|
|
|
|
|
|
|
|
|
|
|
NOTE 5 – COMMITMENTS AND LEASES
Open Data Centers, LLC was committed to long term operating leases for its facility in Piscataway, New Jersey. There are four more years remaining on the lease, however, Open Data Centers LLC’s ability to make these lease payments is in doubt.
Hammer Fiber Optics Holdings Corp has no cross-corporate guarantees, nor are their any personal guarantees made by or on behalf of any directors or officers of Hammer. There are no successor entities.
10
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 5 – COMMITMENTS AND LEASES (CONTINUED)
The future minimum lease payments are provided below:
|
|
Amount
|
|
For the fiscal year ended July 31, 2021
|
387,517.68
|
|
For the fiscal year ended July 31, 2022
|
399,143.16
|
|
For the fiscal year ended July 31, 2023
|
411,117.48
|
|
For the fiscal year ended July 31, 2024
|
423,450.96
|
|
|
|
NOTE 6 – GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has consistently sustained losses since its inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The Company’s continuation as a going concern is dependent upon, among other things, its ability to increase revenues, adequately control operating expenses and receive debt and/or equity capital from third parties. No assurance can be given that the Company will be successful in these efforts.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company intends to continue to address this condition by seeking to raise additional capital through the issuance of debt and/or the sale of equity until such time that ongoing revenues can sustain the business, at which time capitalization may be considered through other means.
NOTE 7 – PROPERTY AND EQUIPMENT
As of April 30, 2020 and July 31, 2019, property and equipment consisted of the following:
|
|
|
April 30,
|
|
July 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Life
|
|
Computer and Telecom equipment
|
$
|
4,085,803
|
$
|
1,091,357
|
|
5 years
|
|
Buildings and Structures
|
|
4,658
|
|
4,999
|
|
|
|
|
|
4,090,461
|
|
1,096,356
|
|
|
|
Less: Accumulated depreciation
|
|
(2,702,974)
|
|
(959,861)
|
|
|
|
Total
|
$
|
1,387,487
|
$
|
136,495
|
|
|
NOTE 8 – INDEFINITE LIVED INTANGIBLE ASSETS
The Company has $3,242,057 of recognized indefinite lived intangible assets, which consist of customer contract assets from acquisitions and goodwill. These assets are not amortized and are evaluated routinely for potential impairment. If a determination is made that the intangible asset is impaired after performing the initial qualitative assessment, the asset’s fair value will be calculated and compared with the carrying value to determine whether an impairment loss should be recognized.
NOTE 9 – RELATED PARTY TRANSACTIONS
During the fiscal year ended July 31, 2016, the Company entered into two promissory notes with a related party for an aggregate amount of $2,400,000 and $1,000,000, respectively. The $2,400,000 note matured on January 4, 2019. The terms consist of ten principal and interest payments due quarterly in the amount of $300,000 for total payments of $3,000,000. The Company is currently in default on this loan. To date, the Company has made payments on this note amounting to $725,831. The payments were applied to interest accrued as of the time of payment as well as to principal. The principal balance was $2,294,067 at July 31, 2019 and 2018. The interest accrued was $219,434 at July 31, 2019.
11
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 9 – RELATED PARTY TRANSACTIONS (CONTINUED)
The $1,000,000 note matured on June 9, 2018 at which time the principal became due in its entirety, in addition to simple interest accrued at 3%. The company is currently in default on this loan.
The party has agreed, in writing, to convert these notes into Common Stock and cure the default.
As of October 31, 2018, all of the related party payables are reported as current liabilities in the Consolidated Balance Sheet.
During the nine months ended April 30, 2020, the Company entered into a Stock Purchase Agreement with a related party on May 5, 2020 and May 30, 2020 in the amounts of $14,000 and $12,000 respectively.
During the current fiscal year ending on July 31, 2020, the Company entered into convertible notes with Erik Levitt, the CEO of the company on April 20th and May 5th 2020 in the amounts of $36,300, and $12,000 respectively. The $12,000 note was paid on May 12th, 2020. The Company entered into a convertible note with Andrea Levitt, spouse of the CEO, Erik Levitt, on August 22, 2019 in the amount of $12,000. $4,500 has been repaid. The Company entered into a convertible note with two related parties on August 24, 2019 in the amount of $12,000 and $6,000 respectively. Any interest may be accrued as either cash or stock at the option of the Company.
During the current fiscal year ending July 31, 2020, the Company entered into Stock Purchase Agreements from a related party in the amount of $10,000 on August 15, 2020, $25,000 on March 17, 2020, and $40,000 on March 26, 2020.
NOTE 10 – STOCKHOLDERS’ EQUITY
Treasury Stock
In July 2016, certain shareholders of the Company contributed 9,291,670 restricted shares of their common stock to the Company’s wholly-owned subsidiary, Hammer Wireless Corporation (“Treasury Shares”), for the purpose of effecting acquisitions, joint ventures or other business combinations with third parties. According to ASC 810-10-45 Consolidations, these shares are accounted for as treasury stock.
On January 4, 2019 the Company repurchased 13,000,000 shares of restricted Common Stock from substantial related-party shareholders. The shares of common stock were repurchased by the Company at $0.0001 per share. The repurchased shares were added to the Treasury stock of the Company and intend to be used for the purposes of effecting mergers, acquisitions, joint ventures, contractual relations and may be issued to investors under private placement agreements.
In connection with the Equity Purchase Agreement with Peak One, the Company issued 350,000 shares of treasury stock.
As a result of these transactions, the Company has a balance of 14,558,387 treasury shares as of April 30, 2020.
NOTE 11 – FOREIGN CURRENCY
We transact business in various foreign currencies including the Euro and the Leone. In general, the functional currency of a foreign operation is the local country’s currency. Consequently, revenues and expenses of operations outside the United States are translated into USD Dollars using the weighted-average exchange rates on the period end date and assets and liabilities of operations outside the United States are translated into US Dollars using the change rate on the balance sheet dates. The effects of foreign currency translation adjustments are not material to the Company’s accompanying financial statements.
12
HAMMER FIBER OPTICS HOLDINGS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2020
(Unaudited)
NOTE 12 – CLAIMS
The following parties have filed claims against Hammer Fiber Optics Investments Ltd and are not secured:
|
Crown Castle Fiber FKA Lightower
|
$
|
1,544,621
|
|
Zayo Group, LLC
|
$
|
2,561,370
|
|
Calvi Electric
|
$
|
9209.69
|
|
Horizon Blue Cross
|
$
|
17,308.58
|
|
Cross River Fiber
|
$
|
273,220
|
Hammer Fiber Optics Investments Ltd reached a settlement agreement with Iron Mountain for $50,000 and already delivered the first payment of $25,000.00 to resolve the matter. The settlement agreement is secured by Hammer Fiber Optics Holdings Corp. Iron Mountain has not delivered in full the equipment it promised to return to the parent, Hammer Fiber Optics Holdings Corp and this settlement is currently in dispute.
Hammer Fiber Optics Investments Ltd reached a settlement agreement with Bank of America for $3,000 and has met its obligations.
The following parties have filed claims against Open Data Centers, LLC and are not secured:
|
Foley Incorporated
|
$
|
5,703.69
|
The following parties have filed claims against 1stPoint Communications, LLC and are not secured:
|
Shannon Walchuk
|
$
|
124,212.47
|
1stPoint Communications is attempting to come to an amicable resolution to this matter.
Please see NOTE 14 – SUBSEQUENT EVENTS below for further detail regarding the ongoing resolution of these claims.
NOTE 13 – S-1 REGISTRATION STATEMENT
On October 8, 2019, the Company completed an Equity Purchase Agreement with Peak One Opportunity Fund (“Peak One”) and Peak One Investments, LLC (“Peak One Investments) giving the Company the option to sell up to $10,000,000 worth of our common stock to Peak One (the “Maximum Commitment Amount”), in increments, over the period ending twenty-four (24) months after the date the Registration Statement is deemed effective by the SEC (the “Commitment Period”). Additionally, the Company is required to issue Commitment Fees of 175,000 Shares each to Peak One and Peak One Investments.
The Company also has an October 8, 2019 Registration Rights Agreement with Peak One requiring us to file an S-1 Registration Statement providing for the registration of 13,350,000 Shares that result from our selling to Peak One an indeterminate number of shares up to an aggregate purchase price of $10,000,000 and the subsequent resale by Peak One of such shares.
This S-1 was effective on February 1, 2020.
NOTE 14 – SUBSEQUENT EVENTS
On June 14, 2020, Michael P. Cothill tendered his resignation as the Executive Chairman, Treasurer and Principal Financial Officer of the Company. Mr. Cothill will continue as the Company’s Non-Executive Chairman. Erik Levitt, the Company’s Chief Executive Officer will assume the role of interim Principal Financial Officer.
Open Data Centers, LLC has received a default notice from Corporate Place Partners, LLC and its ability to fulfill its obligations under the lease are in doubt.
13
